In a decisive announcement that has electrified financial circles, Donald Trump has officially nominated Kevin Warsh to be the next chair of the Federal Reserve. Warsh, known for his forthright critiques of the US central bank, steps into a role that promises to be both powerful and controversial.
This nomination wraps up months of intense speculation about who would take over from Jerome Powell, whose term ends in May. Trump has made no secret of his desire for rate cuts, actively campaigning for a candidate who shares his vision. In a post on his Truth Social platform, Trump gushed about Warsh, stating, “I have known Kevin for a long time and have no doubt he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is ‘central casting,’ and he will never let you down.”
At 55, Warsh isn’t a newcomer to the Fed; he served as a governor from 2006 to 2011 and has been deeply involved in Wall Street. Interestingly, he was in the running for the chairmanship back in 2017 when Powell ultimately landed the job. Now, the Senate will need to green-light Trump’s choice before he takes the helm.
The Federal Reserve chair position grants immense influence over the world’s largest economy, making Warsh’s selection a pivotal moment for both the administration and financial markets. Stephen Brown, a US economist at Capital Economics, indicated that markets see Warsh as “a relatively safe choice,” which eases fears that Trump might appoint someone seen as a mere “stooge” to the Fed.
Following news of Warsh’s expected nomination, the dollar initially surged, only to pull back afterward. Meanwhile, gold prices dropped sharply by 4.8%, sliding to $5,132 an ounce—a reflection of the market’s uncertainty.
Warsh has a history of sounding alarm bells over inflation in the US but has also aligned himself with Trump’s desire for quicker rate cuts. Since resigning from the Fed over its post-financial crisis stimulus in 2011, Warsh has not held back in his critiques. Notably, in April of last year, he characterized the Fed’s central bankers as “pampered princes” and criticized their tendencies to stray from their main objective of maintaining price stability.
With a background as a special assistant for economic policy from 2002 to 2006 and serving as the Fed’s representative to the G20, Warsh is now a lecturer at the Stanford Graduate School of Business. He also holds roles at UPS, the Korean e-commerce giant Coupang, and the Duquesne Family Office, a leading investment firm.
Personal ties add an intriguing layer to his nomination; Warsh is married to Jane Lauder, granddaughter of cosmetics mogul Estée Lauder and daughter of billionaire Ronald Lauder, who has influenced Trump’s ambitions, including attempts to acquire Greenland.
In addition to Warsh, other names floated for the Fed chair position include Kevin Hassett, Christopher Waller, and Rick Rieder, each with their own visions for US monetary policy. Historically viewed as a monetary policy hawk, Warsh has now positioned himself alongside the White House’s push for lower borrowing costs.
In December, Trump praised Warsh, saying, “He thinks you have to lower interest rates.” However, Brown cautioned that while Warsh’s hawkish views could alleviate concerns about his independence, there remains a risk that his belief in the combined powers of AI and regulatory changes could lead to upward pressure on long-term bond yields.
With Warsh at the helm, the Fed could be on the cusp of a significant shift in direction, setting the stage for a transformative period in US monetary policy.
